My millennial daughter Jennifer saw me wearing my Grateful Dead t-shirt the other day and she exclaimed: “Geesh, dad. Forget the Sixties! Forget Woodstock! Enough already.”

She has a point. It’s time for baby boomers (like me) to get over ourselves and our cultural fetishes.

It’s a different demographic, the millennials, who are an even greater force behind marijuana legalization and commercialization. And therein lies an important but largely ignored investment theme, as I’ll explain below.

Research shows that companies that connect with their customers on an emotional level tend to outperform their competitors. This truism applies to marijuana companies that target millennials.

The millennial generation, born between 1981-1996, is now the largest generation in America at over 72.2 million. Millennials already outnumber baby boomers.

As of 2023, the millennial age range is between 27 and 42. That means millennials have the power and time to change the cannabis industry for several decades. They’re often referred to as self-entitled and coddled, because they’ve been praised too often by their baby boomer parents (I plead guilty).

But as an investor, here’s how you should look at it: Millennials are the most diverse and promising generation in the U.S. They have the largest buying power and the most social and political power.

Millennials are one of the most educated generations; 61% of adult millennials have attended college. Millennials grew up with the Internet and helped shape how the 2023 world dates, eats, socializes, shops, communicates, speaks, and protests (e.g. social media hash tags).

The increasing legalization of recreational and medicinal marijuana is one of the biggest business trends unfolding today. Pot is becoming a multi-billion dollar industry, with profound implications for consumer society. Millennials are a major change agent in the mainstreaming of marijuana.

It’s not just revenue from recreational and medicinal pot products. The legalization of cannabis and hemp has the potential to revitalize farming communities, create jobs in economically depressed urban centers, foster new innovations for pharmaceuticals and nutraceuticals, and ignite a manufacturing boom.

A time-proven way to make money over the long haul is to invest in companies with disruptive technologies that are transforming business models. The rise of e-commerce pioneer Amazon (NSDQ: AMZN) epitomizes this truism.

The advent of online shopping has upended the retail industry and turned many once-dominant retail names into dinosaurs, much the same way web-based publishing has decimated many famous magazine and newspaper titles in the print world.

However, this “creative destruction” poses enormous opportunity for investors. One investment opportunity right now is the nexus between the rising economic power of millennials and the marijuana boom.

Millennials are notoriously resistant to investing and saving. However, growing numbers of this demographic group are grasping the potential for marijuana and they’re pouring money into marijuana-related stocks and exchange-traded funds, whereas before they largely ignored Wall Street.

Millennials also increasingly prefer cannabis to booze and they’re more likely to buy marijuana products if they’re marketed as a “lifestyle” brand. High-income millennials are spending almost a third of their discretionary income on entertainment.

Much is made about how aging baby boomers and even their parents are turning to medical marijuana to address their aches, pains and illnesses. This trend is very real.

However, now flying under the radar of the financial press is a mega-trend occurring in plain sight, which is the growing role of millennials in creating marijuana companies, investing in pot stocks, buying pot products, and working to make laws more marijuana friendly.

It’s an investment angle that gets short shrift. You should look for companies that understand and exploit this dynamic. During the recent marijuana industry shake-out, these companies were among the survivors.

Cannabidiol (CBD) for graying boomers is all fine and good, but the big money over the long haul will be in marijuana “lifestyle” products for increasingly affluent millennials: marijuana tourism, branded pot products with hipster appeal, marijuana-themed clothing, high-end marijuana vaping parlors…you name it.

Dr. Sagan’s sagely words…

The legalization of cannabis in the U.S. continues apace. Marijuana remains outlawed at the federal level but a growing number of states are legalizing weed to varying degrees.

Marijuana is legal for adults in 22 states and Washington, DC. Medical marijuana is legal in 38 states and DC. Two states, Missouri and Maryland, legalized cannabis via ballot initiatives in the 2022 midterm elections. In April 2023, Delaware became the latest state to legalize cannabis (see chart).

To quote the late Dr. Carl Sagan, the famous American astronomer, astrophysicist, cosmologist, TV personality and bestselling author:

“The illegality of cannabis is outrageous, an impediment to full utilization of a drug which helps produce the serenity and insight, sensitivity and fellowship so desperately needed in this increasingly mad and dangerous world.” Most millennials would agree.

The crucible of 2008-2009…

Many millennials came of age during the Great Recession of 2008-2009, and while they are not the first generation to experience an economic downturn, they came out of it reinventing the job market, as a wave of bloggers, freelancers and social media influencers helped rethink the meaning of education and work.

The recession and related financial crisis marked the worst economic downturn since the Great Depression of the 1930s. It crushed the economic identity of an entire generation, forcing twenty-somethings into debt-financed education and low-paying jobs, with little reprieve.

Yet these laid-off young adults returned to school, entered new industries and built startups. They were shaken but still committed to shaping and being part of the global economy. They are now applying this entrepreneurial attitude to the emerging cannabis industry.

Today, the cannabis industry has the ability to rebuild the economic identity of the millennial generation, generating millions of new jobs. The economic hope of the cannabis industry is compelling for an indebted generation looking for new industries and better opportunities.

The cannabis industry will help shape the political landscape by decriminalizing cannabis use, possession, cultivation and sales not only in the U.S., but also around the world. Although millennials were raised on D.A.R.E (Drug Abuse Resistance Education) and fearmongering This is Your Brain on Drugs public service announcements, 73% of the generation support full legalization and consider the war on drugs a complete and utter failure.

According to political data, millennials came out in force during the 2022 midterm elections to help send marijuana-friendly politicians to Congress. Those newly minted lawmakers are now introducing a raft of bills to normalize marijuana laws.

Revitalizing communities…

The growth of the marijuana industry also means a shift in how society views drug use and the use of cannabis. As more millennials become parents, there will be a drastic shift in how their children view cannabis consumption and hemp.

Baby boomers and Generation X are involved in shaping and funding the marijuana industry, while simultaneously reaping the benefits, but their role will be relatively short lived.

According to a recent report from New Frontier Data, the generation to watch are the millennials, aka Generation Y (the demographic group that directly follows Generation X). Now in their late 20s to early 40s, millennials are becoming parents themselves.

The New Frontier report shows that much has occurred within the millennial demographic group, in terms of its relationship to cannabis.

The report found:

• 80% of millennials say that marijuana should be legalized.
• As the first mainstream cannabis adopters with disposable income, almost half (49%) spend between $50 and $200 per transaction.
• 39% of millennial users report consuming multiple times a day but with greater disparity between men and women than other groups.
• Millennials substitute cannabis for sleep medication at higher rates than other groups (77%).
• 66% identify strain as very important in influencing their purchasing decision, speaking to their sophistication as consumers.
• Given their status as parents of young children, compared to other groups, millennials are more interested in consuming away from home, i.e., at someone else’s home (51%) or on vacation (17%).

For millennials, the biggest factor in making a marijuana purchase is potency. Price comes in at number three, yet another sign that marijuana is inflation resistant (see chart).

The report states: “Millennials came of age when cannabis-related social attitudes and policies were changing rapidly. As young adults, they watched the normalization of cannabis use mitigate negative stereotypes, and they have played a leading role in the emergence of the legal cannabis economy, both as participants in the market and as champions for change.”

Millennials were shaped by globalization and the Internet. Polls show that their social attitudes aren’t necessarily “liberal” (as with the activists of the 1960s), but they’re generally tolerant and libertarian. These are positive factors for marijuana’s future growth as a business.

If you seek an investment theme with multiyear momentum, the link between millennials and marijuana is the place to look. I’ll elaborate on this money-making angle, in future issues.

WATCH THIS VIDEO: Cannabis Legal Reform Rolls On

As cannabis cements its status as a consumer staple, some pot stocks are superb investments. But many others are not. You need to conduct due diligence. That’s where my publication, Marijuana Profit Alert, comes in. By applying my proprietary screening methodologies, I pinpoint for subscribers the most attractive plays on the psychotropic revolution. To learn more, click here.

John Persinos is the chief investment strategist of Marijuana Profit Alert. For the record, he was born during the Eisenhower era.

You can reach John at: mailbag@investingdaily.com

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